Where have all the HQ employees gone?

Wages have risen, but the number of workers in head offices hasn't

Mayor Rahm Emanuel has prioritized recruiting corporate headquarters to Chicago. Though federal data show that during his term wages paid to employees at Cook County HQs grew at a decent pace, employment at those HQs has stayed flat.

Total annual wages paid to employees at an HQ, defined as a corporate, regional or subsidiary managing office, climbed 9.5 percent between 2011 and 2016 to $5.32 billion in Cook County. Average annual pay equaled almost $128,000. But the number of employees working in those offices held steady at approximately 41,400, according to the U.S. Bureau of Labor Statistics.

Over the same span,​ counties containing New York and Houston grew HQ employment faster than Cook County, though New York's wages went up at just 1 percent to $10.01 billion. New York is home to more Fortune 500 companies than any other U.S. city; Chicago and Houston tie for second.

The number of headquarters in Cook County has grown 17 percent to 473 over Emanuel's tenure. Some of that increase can be chalked up to new head offices, but an undetermined portion represents better data collection by the Bureau of Labor Statistics.

City-level data are not available from the bureau's Quarterly Census of Employment & Wages, so county-level data offer the most detailed, current information on specific industries. The Emanuel administration says that wider-angle lens means the data are only partially relevant. To be sure, new jobs generated from companies moving from suburban Cook County are not registered as a gain. But many headquarters have moved to Chicago from farther out, like Gogo and Hillshire Brands from DuPage County. McDonald's, which is building a new headquarters in the city, will be recorded in this county-level data when it moves from Oak Brook in 2018.

Headquarters recruitment represents one of the go-to tactics for economic development specialists and politicians, including Emanuel, who has cut a ribbon or two at the new offices of companies like Archer Daniels Midland, Motorola Solutions, Conagra, Beam Suntory and Great Wolf Resorts. While Cook County's substantial wage growth increases the area's wealth, the flat employment numbers dovetail with the trend of a corporate headquarters housing a cadre of top executives yet fewer significant business units or administrative employees.

"I don't think it's as simple as, 'It's good' or 'It's bad,' " says Kevin Hively, founder of Ninigret Partners, a business and economic development strategy consulting firm in Providence, R.I. "It depends on what the total picture looks like."

Deputy Mayor Steve Koch says it's wrong to report that headquarters haven't boosted employment. He says bringing corporate headquarters to Chicago increases local employment in professional services. When companies settle in a city, he says, executives are more likely to buy services from their hometown.

Indeed, between 2011 and 2016, Cook County employment in professional, scientific and technical services grew nearly 18 percent, while total wages in that category grew more than 30 percent. The average annual wage grew almost 11 percent to $106,311. The category includes lawyers, architects, engineers, accountants and marketers. It also includes notaries, private building inspectors, surveyors, veterinarians and photographers. "I would maintain headquarters have a greater positive impact than non-headquarters," Koch says.

SPINNING OFF SERVICES

Headcount at corporate HQs has been shrinking for more than a decade as companies spin off traditional services like payroll or information technology to back offices in low-cost locations, from Salt Lake City to Belfast. Boeing, the archetypal example of a company that moved to Chicago, employs just over half the 1,000-strong workforce of its former headquarters in Seattle.

Meanwhile, population loss blunts Chicago's overall economic trajectory, since the raw material for any job boom is people, as Aaron Renn, a senior fellow at the Manhattan Institute for Policy Research, points out. That reality contrasts starkly with fast-growing Houston. Harris County, which contains the east Texas city, saw population climb 8 percent between 2011 and 2015. It also saw annual average employment at corporate headquarters from 2011 to 2016 grow 81 percent to 30,446. Total annual wages grew 95 percent to $4.78 billion.

Rising wages are an obvious benefit to a region. "Housing prices have trailed in Chicago," Renn says. "Well, when incomes go up, you can pay more for a house."

Economic benefits aside, corporate headquarters do carry a different, powerful benefit, says Christopher Mooney, director of the Institute of Government & Public Affairs at the University of Illinois. They are as popular as mom and apple pie for politicians who want to claim credit for bringing jobs to an area.